When Xpress Super decided to make a submission to the Financial Service Inquiry (FSI), it forced me to take some time out and sit back and reflect about the self-managed super fund (SMSF) sector.

While doing so, those immortal words of the late American broadcaster and author, David Brinkley, came flooding back to me. “A successful man (woman) is one who can lay a firm foundation with the bricks others have thrown at him (her).”

For me, that’s the SMSF sector in a nutshell. No one ever misses an opportunity to throw bricks at us, and, while they do so, the sector just goes from strength to strength.

Indeed, it’s the very viability of SMSFs, whether it’s the engagement of trustees, the growing expertise of the professionals servicing a sector that now has about $550 billion in funds under management, or, perhaps most importantly, the realisation that many people are finally taking control of their retirement income strategy, that seems to infuriate our critics the most.

But let’s not worry about them. They’ll keep throwing bricks – and we’ll keep building.

The fact, however, that more people are taking control of their retirement income strategy, the very principle, I would argue, that primarily motivates those who decide to establish an SMSF, is one that every industry practitioner should defend. There are many aspects to this principle, but the one that motivated me to write a submission to the FSI was the fear that 'David Murray and his Gang of Four' might decide to impose barriers to setting up and SMSF, notably around education and the level of funds under management.

Let’s make no mistake here; those suggesting such barriers are not motivated by altruism, but self- interest. In seems all these trustees, in the main professional people, farmers, and small businesses, for whom making critical decisions on a daily basis is integral to their enterprises, are suddenly out of their depth when it comes to superannuation.

Well, that’s not what the Cooper Review found in 2010 when it said that the SMSF sector was proving to be “a largely successful and well‐functioning part of the [superannuation] system”. Then there was the recent NAB research that revealed the average SMSF outperformed, in investment returns, the rest of the superannuation industry in six of the eight years from 2005 to 2012. A Roy Morgan report into ‘Superannuation Satisfaction’ found a higher level of satisfaction among SMSF members with their superannuation compared with industry and retail funds. 

These are the hard facts that demonstrate the underlying resilience of our sector. It is why I argued in my submission that if people are aware that when they are setting up a fund with a low balance there are higher disproportionately higher fees than an APRA-related fund, then it is a price worth paying because:

  • They are engaged with their super and this will have long-term benefits
  • There will be flow-on benefits to all other areas of their financial lives.

Hopefully, at a time when Australia, like the rest of the developed world, is grappling with the issue of longevity, the FSI will realise the importance of having a growing number of people actively engaged with their superannuation. This was the realisation that Cooper came to 2010, and there’s no evidence since that this situation has changed.

Indeed, I would argue that with the growing professionalism of the SMSF advisors (as highlighted by the recent SPAA-Macquarie report) who are now servicing the members and trustees of the more than half a million funds, then our industry is better placed than ever. Let’s hope the FSI agrees.